In order to reach reach mass-market status, providers of insurance telematics must make better use of digital channels. Jessica Royer Ocken reports.
At the end of 2012, a European Union directive eliminated gender as a consideration in the pricing of auto insurance. Capitalizing on the outrage, insurethebox, which already had 60% of the U.K. telematics-based insurance market, launched a sister brand: Drive like a girl (DLG).
According to the company, female drivers aged 17 to 25 are statistically much less likely to cause serious accidents than males in the same age group, so “the essence of Drive like a girl is in the name,” says Parm Evans, who manages public relations for the company.
Drivers of either gender receive rate discounts when they prove they drive safely – like a girl. This proving is done through a GPS-linked box installed in the car that tracks driving behavior – a standard usage-based insurance (UBI) set-up, and essentially the same as insurethebox.
Still, DLG signed up 9,000 customers in the first four months after its launch in January 2013, Evans says. Why? Through an effective marketing campaign, it connected with its audience and made the benefit of its product perfectly clear – with some help from the E.U. playing the villain.
Although UBI is a new insurance product, marketing it is hardly different from marketing traditional insurance, says Thomas Wetzel, president of Thomas H. Wetzel & Associates and former interim executive director of the Minneapolis-based Insurance Marketing and Communications Association (IMCA).
Both UBI and traditional insurance products need clear, creative and consistent messaging that finds its target audience at the right time.
The only big thing that’s different for UBI marketing is how this messaging is primarily delivered: via digital channels, such as websites and social media, which can more effectively target different segments of the current and potential customer base.
Billboards, TV ads and radio spots are still ubiquitous, of course, even with UBI, but they’re more likely than not reinforcing a message customers already received online. “It’s no longer mass advertising,” Wetzel says. “You have to know your markets, know your audience. They will not come to you. You have to go to them.”
What’s also changed, for both UBI and traditional insurance, is that it’s no longer enough to sell someone a policy and forget them until it’s time to renew, according to Wetzel.
To be sure, there is, with UBI, also the need to explain what is essentially a new technology, and insurers must make sure to allay the many associated privacy concerns.
What follows are some of the biggest dos and don’ts of savvy UBI marketing.
Focus on new channels
“From the corner of your computer screen to the pages of your favorite magazine, our marketing and advertising efforts are everywhere,” says Erin Vrobel, a member of Progressive’s public relations team.
She adds that it’s “a tall order in the age of smartphones and constant connection” to be everywhere where current and future customers may be, but that’s the company’s goal.
According to Wetzel, smartphones are an essential component of any effective marketing strategy. Hence, insurers’ websites should be optimized for mobile access.
Younger generations in particular are “not tied to a desk,” Wetzel says. “They’re walking down the street or getting coffee someplace” as they access information.
And UBI fits nicely into this scenario because it’s also these younger people who are more receptive to telematics-based insurance. They’re more comfortable and proficient with technology, and they’re less concerned about privacy issues, Wetzel says.
Create a multichannel approach, customized message
Your company probably won’t survive long-term with solely millennial customers, so don’t neglect other market segments and find the right ways to connect with them too.
PEMCO, a small, Seattle-based insurance company which writes policies primarily in Washington state, has great market penetration in its area because it truly knows its audience, Wetzel says.
Its advertising campaign focuses on the quirky personalities of Washington locals and emphasizes that PEMCO staffers are quirky Washingtonians too.
USAA Insurance also does a great job connecting with customers, who are military members and their families, according to Wetzel. This company was an early adopter of social media, and it has only enhanced its ability to connect with customers and converse with them about a wide range of insurance-related topics – from financial issues to the challenges of deployment.
“It all goes back to knowing your audience,” Wetzel says. “It’s not just the masses out there.”
Although you want a unified message to sell your product, you may emphasize different aspects of it when approaching different niches. Or you may phrase it a different way – perhaps in 140 characters for Twitter.
Saving money will likely appeal across the board, but you can also focus on technology with younger drivers and emphasize safety features with seniors, according to Wetzel. And you may need more traditional advertising channels to reach older consumers.
In addition, it’s important to remember that digital communications tend to be more informal and conversational. When using those, “insurance companies should not be lecturing,” Wetzel says.
Highlight savings and safety
When it comes to the content of your message, for the moment, price is king. The money drivers can save is nearly every company’s favorite marketing mantra.
DLG uses “a carrot rather than a stick approach,” Evans says. There are no curfews or penalties involved with the program. “The ethos behind the product is to encourage and reward safe driving,” he says.
If customers drive safely, they get a discount after three months.
But there are secondary benefits DLG emphasizes as well. “Everyone wins from this approach,” Evans says. “You get lower premiums if you ‘drive like a girl,’ we are less likely to get expensive accident claims and the roads are safer.”
Still, there’s a component of the savings argument that can’t be ignored, Wetzel says. “You can’t just emphasize savings without acknowledging the fact that consumers will realize savings only if they’re lower-risk drivers.”
If they’re not already driving safely, UBI may not benefit them. For these drivers, you have to “lay out a pathway” they can use to improve their skills and realize some savings. Show them the safety benefits of being part of a UBI program.
“The challenge for companies now is to use [their UBI] program to show drivers how to make themselves more attractive and save money,” Wetzel says.
Continue the conversation
Once you get into who saves and who doesn’t with UBI, this may lead to a discussion of other factors involved in determining someone’s insurance premium (where they live, what they drive, when they drive). And, suddenly, this is a pretty difficult message to get across in an increasingly fast-paced world.
How do you fit all of that into a pop-up ad? Or a radio spot?
Whatever message you use to pique potential customers’ interest must be continued as part of an ongoing dialogue, Wetzel says. “Without it, they’ll lose interest, and another company will get their attention.”
Progressive addresses this issue by keeping an array of cost-saving options in front of their customers and making sure they feel in charge. Snapshot, Progressive’s UBI program, appeals to a lot of drivers because it puts them in the “theoretical driver’s seat” and lets them “earn the discount they deserve,” Vrobel says.
But Snapshot is just one way to a discount with Progressive. Customers can save money by being homeowners, insuring multiple cars or bundling their coverage, she explains. There are also savings options for mileage, students and paying in full. And you save $50 immediately on your first policy simply by signing your documents online.
Find a way to stand out
As the UBI market matures, marketing messages will grow even more complex and multilayered, Wetzel predicts. “There’s a trend toward commoditization,” he says. “Many consumers see little difference between companies, so for them, price is the only difference.”
But anyone who’s actually used their insurance policy knows there are other differences – in coverage, in how claims are handled, in how responsive customer service agents are, in what other services are available.
These intangibles will be increasingly important to convey as competition increases. “People want to feel that you as a company or an agent understand their situation,” Wetzel says. “It’s not just about selling insurance.”
Fortunately, the increased communication between insurer and customer that comes with UBI can facilitate this very idea. Marketing and customer relations should go together, Wetzel says.
As DLG drivers review their driving behavior through a personalized web portal, they get feedback and updates from the company, according to Evans. This two-way communication is “a completely different relationship from conventional insurers, and there is overwhelming evidence that customers like it and that our incentives lead to better driving.”
And that should be exactly the point. UBI is great for insurers because it offers all sorts of new data that are helpful in reducing exposure to risk, Wetzel says. And it offers a means to attract new customers with the promise of savings.
But the companies that will ultimately be successful are those that “address the back end, all the implications and issues of how to take that information and use it not just for company benefit, but for policy holders too,” Wetzel says.
Jessica Royer Ocken is a regular contributor to TU.
For all the latest telematics trends, check out Consumer Telematics Show 2014 on Jan. 6 in Las Vegas, Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, and V2X and Auto Safety USA 2014 on July 8-9 in Novi, Michigan.
For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.